Sales of previously owned homes experienced a notable increase of 4.8% in November compared to October, according to data from the National Association of Realtors (NAR). This rise brought the seasonally adjusted annualized rate to 4.15 million units.
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Year-over-year, home sales showed a 6.1% increase from November 2023. This marks the third-highest sales pace for 2024 and represents the most significant annual gain in the past three years.
The sales data, based on finalized transactions, reflects contracts that were likely signed during September and October. It’s important to note that mortgage rates, which had dropped to an 18-month low in September, saw a sharp increase in October.
“Momentum in home sales is clearly building,” stated Lawrence Yun, NAR’s chief economist. He attributed the trend to several factors, including job growth, an increase in housing inventory compared to last year, and consumer adaptation to mortgage rates stabilizing between 6% and 7%.
The inventory of homes available for sale at the end of October stood at 1.33 million units, reflecting a 17.7% increase from November 2023. At the current sales pace, this equates to a 3.8-month supply of homes, which is still below the six-month supply considered balanced between buyers and sellers.
Despite the increased supply, tight inventory levels continued to push prices upward. The median home price in November rose to $406,100, representing a 4.7% year-over-year increase. Notably, this marks a return to stronger annual price growth, as October saw a 4% annual rise.
Regional trends showed the most significant price gains in the Northeast and Midwest, where prices increased by 9.9% and 7.3%, respectively. Approximately 18% of all homes sold during November went for above their listing price.
First-time homebuyers made modest gains, accounting for 30% of November sales, up from 27% in October. However, this figure remains slightly lower than the same period last year. Cash purchases continued to play a significant role, comprising 25% of all sales. In contrast, investor activity declined, representing just 13% of sales compared to 18% in November 2023.
Yun raised some critical questions about the investor slowdown: “Does this suggest that investors or financially driven buyers believe home prices have peaked? Or could it be linked to the recent stagnation in rental growth?”
The luxury housing market displayed the strongest performance, with sales of homes priced over $1 million surging by 24.5% year-over-year. On the other hand, sales of homes priced below $100,000 dropped sharply by 24.1%.
Meanwhile, mortgage rates have been climbing once again. Following the Federal Reserve's recent meeting, the average rate on a 30-year fixed mortgage jumped by 21 basis points on Wednesday. Expectations for interest rate cuts in the upcoming year have also diminished, signaling potential challenges ahead for the housing market.
